Independent Assessment of the Parliamentary Commission Report Final Report - 23 September 2012 Submitted to Kumtor Gold Company Submitted by Prizma LLC 1972 Woodcrest Circle Mosinee, WI 54455, USA www.prizmasolutions.com Table of Contents 1 Executive Summary ............................................................................................................................... 1 1.1 Background ................................................................................................................................... 1 1.2 Approach and report structure ..................................................................................................... 1 1.3 Authors’ background ..................................................................................................................... 3 1.4 Key context and project changes .................................................................................................. 4 1.5 Summary of conclusions & recommendations ............................................................................. 4 1.5.1 Geotechnical issues: TMF and Petrov Lake ........................................................................... 4 1.5.2 Flora, Fauna and Biodiversity ................................................................................................ 5 1.5.3 Glaciers and water consumption .......................................................................................... 5 1.5.4 Groundwater and permafrost ............................................................................................... 6 1.5.5 Environmental Management ................................................................................................ 7 1.5.6 Waste Management.............................................................................................................. 7 1.5.7 Data reliability and transparency .......................................................................................... 8 2 Geotechnical Issues: TMF and Lake Petrov ......................................................................................... 13 2.1 Background ................................................................................................................................. 13 2.2 Issues raised by the Parliamentary Commission......................................................................... 14 2.3 Movement of the TMF Dam........................................................................................................ 15 2.4 Petrov Lake natural moraine dam: Glacial Lake Outburst Flood (GLOF) .................................... 19 2.5 Conclusions and recommendations ............................................................................................ 22 3 Flora, Fauna and Biodiversity .............................................................................................................. 24 3.1 Background ................................................................................................................................. 24 3.2 Introduction ................................................................................................................................ 24 3.3 Key issues in PCR ......................................................................................................................... 25 3.4 Baseline Data and Monitoring .................................................................................................... 25 3.5 Kumtor’s exploration in “Buffer Zone” of the Reserve ............................................................... 28 3.5.1 Background of SCER with respect to KOC ........................................................................... 28 3.5.2 SCER boundary delineation and area issues ....................................................................... 28 3.5.3 The SCER “Buffer Zone” ...................................................................................................... 30 3.5.4 KOC Exploration in “Buffer Zones” ...................................................................................... 32 3.5.5 Limited Government support for SCER and Biodiversity Conservation .............................. 33 i 3.6 Impacts to vegetation in the Arabal Rriver Valley and Barskoon Gorge .................................... 34 3.7 Conclusions and recommendations ............................................................................................ 35 4 Glaciers and water consumption ........................................................................................................ 38 4.1 Background ................................................................................................................................. 38 4.2 Glacial ablation and retreat in Kyrgyzstan .................................................................................. 38 4.3 Regional hydrology ..................................................................................................................... 39 4.4 Key issues raised by the Parliamentary Commission .................................................................. 40 4.5 Scale of Kumtor’s impact on glaciers .......................................................................................... 41 4.6 Kumtor effects on glacial melting ............................................................................................... 42 4.7 Kumtor’s impact to movement of glaciers ................................................................................. 42 4.8 Pit hazards from Davidov Glacier ................................................................................................ 44 4.9 Emergency Response Plan .......................................................................................................... 44 4.10 Dust impacts from Kumtor .......................................................................................................... 45 4.11 Kumtor’s impact on regional hydrology ..................................................................................... 45 4.12 Recirculation water for the process facility ................................................................................ 47 4.13 Conclusions and Recommendations ........................................................................................... 48 5 Groundwater and permafrost ............................................................................................................. 50 5.1 Background ................................................................................................................................. 50 5.2 Context of water monitoring in Kyrgyzstan ................................................................................ 50 5.3 Water quality concerns in Naryn ................................................................................................ 53 5.4 Key issues raised by Parliamentary Commission ........................................................................ 53 5.5 Analysis of issues raised .............................................................................................................. 55 5.6 Conclusions and recommendations ............................................................................................ 55 6 Environmental Management .............................................................................................................. 57 6.1 Background ................................................................................................................................. 57 6.2 Key Environmental Management issues raised by the PCR ........................................................ 57 6.3 Review of Parliamentary Commission Assessments ................................................................... 58 6.4 KOC Environmental Management Plan ...................................................................................... 58 6.5 Access to documents .................................................................................................................. 59 6.6 Key Water Quality Issues raised in the Parliamentary Report .................................................... 60 6.6.1 Reliability of KOC Water Quality Data ................................................................................. 60 6.6.2 Other water quality and QA/QC issues ............................................................................... 60 ii 6.6.3 Applicable water standards ................................................................................................ 60 6.6.4 Kumtor’s compliance point ................................................................................................. 61 6.6.5 Kumtor’s impacts on local fisheries .................................................................................... 62 6.6.6 PCR commission sampling of surface water within the Kumtor Mine Area ....................... 62 6.7 Soil issues .................................................................................................................................... 65 6.8 Air Quality monitoring ................................................................................................................ 65 6.9 Conclusions and recommendations ............................................................................................ 66 6.9.1 Water quality .....................................................................................................................